What role should the government play in the health care of its citizens?

November 28, 2013 at 12:00 AM EDT

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The ACA roll-out has raised questions on where the government should draw the line in the personal welfare of its citizens. How does the new health care law complicate the ideas of individual rights and collective responsibilities?Jeffrey Brown talks to Jacob Hacker of Yale University and Avik Roy of the Manhattan Institute.

TRANSCRIPT

HARI SREENIVASAN: Now a look at some of the larger issues raised in the ongoing debate over the Affordable Care Act, questions of how deeply a government should involve itself in the personal welfare of its citizens, of individual rights and collective responsibilities, even whether the law’s troubled rollout might be seen as a challenge to the viability of the liberal philosophy at its core.

The latest major setback came yesterday, when the Obama administration announced a one-year delay in launching the federal Web site for small businesses to enroll their employees with insurers.

Jeffrey Brown gets two views on these bigger issues at stake.

JEFFREY BROWN: And for that, we’re joined by Jacob Hacker, director of the Institution for Social and Policy Studies at Yale University. He worked on the broad blueprint of the health care law and has written a number of books about social policy in the U.S. And Avik Roy is a senior fellow at the Manhattan Institute and author of the new book “How Medicaid Fails the Poor.” He served as Mitt Romney’s health care adviser during the 2012 presidential campaign.

Even before we get to the problems of the rollout, how do you see the affordable health care act fitting into a larger debate in the U.S. over many decades over the role of government in the lives of its citizens?

JACOB HACKER, Yale University: Well, we have been debating the place of health care in the American social contract since the early part of the 20th century.

And that debate for 75 years or so has resulted in legislative failure. And the Affordable Care Act was a landmark step forward. Americans for a long time have believed that health care is an essential public responsibility.

What changed in the last 20 years or so is that the sector of the economy that was providing health benefits, employers, increasingly started to off-load them, and the Medicaid program started to pick up a lot of that slack.

And so from the — Bill Clinton’s health effort in 1993 through the successful passage of the Affordable Care Act, we saw more and more pressure being put on this issue by those who are concerned about the increasing gaps in American health insurance.

So I think it clearly is designed to become an integral part of the American social fabric, like Medicare or Social Security is.

JEFFREY BROWN: OK.

Avik Roy, is it a — is it an essential part of the fabric — how do Americans see it? Is it a responsibility of government? Is it a right of citizens?

AVIK ROY, The Manhattan Institute: Well, I don’t think the American public hand — the polls echo this — that the American public doesn’t necessarily believe that government should have complete responsibility for the health care system or even a broad responsibility for the health care system.

However, I do share the goal and I think a lot of conservatives do share the goal that a basic safety net that does provide basic health care for everyone is an attractive and worthy goal. The problem with our system today is the enormous waste and the unaffordability of the system today and the federal spending, which is increasingly a burden on middle-class taxpayers.

And the thing with the Affordable Care Acting is, while it does expand coverage, it actually makes health care less affordable for a lot of people.

JEFFREY BROWN: So — just to stay with you, Avik Roy, so, is it a question of where to draw the line with how much government action in this?

AVIK ROY: Yes.

I mean, if we — unfortunately, because of the way our system evolved, it evolved in a very idiosyncratic way, right? We have Medicare for the elderly and Medicaid for the very poor and then filled in the blanks with a lot of different patches. And, as a result, the system we have today is very inefficient.

If we had started with a system that really focused on providing adequate and basic health care to the poor, we’d have a much more efficient and cost-effective system today. Unfortunately, we don’t, and that’s why we’re stuck in what Paul Starr would call a policy trap, where re-allocating health care resources from the elderly, from other people who benefit from the status quo is very difficult.

JEFFREY BROWN: Well, Jacob Hacker, can you agree with part of that, that we’re sort of stuck in a kind of trap that — of effectiveness, of efficiency?

JACOB HACKER: Absolutely.

I actually think that Paul Starr’s formulation of this in his — in his work as a basically a path-dependent story, where we — we never would have chosen the system we have today, but it came out — about through a series of missteps and policy defeats, is very much true.

And it’s absolutely true, too, that the system is quite inefficient. But the important thing to keep in mind is that the Affordable Care Act was designed really to work with the existing system. And I think some of its difficulties reflect the huge fragmentation of that system, the fact that it’s relying so heavily on private insurance plans, that it’s not trying to displace the existing employment-based system, which I think Avik and I would agree isn’t — wouldn’t in an ideal world be the best way to provide coverage.

After all, if you lose your job, you lose your health insurance. And tying health care so closely to employment reduces job mobility, is not a great idea for employers in a global economy, and so on. So we have to deal with the reality of the system as it is today.

And I think the real question before us is how do we move forward given the fact that we do have an inefficient system that simultaneously fails to cover everyone and costs far more than the systems in other advanced industrial democracies.

The Affordable Care Act was an important step forward. I still think it’s going to make an enormous positive difference, but this has been a very difficult period because the implementation of it has been so poorly handled and because it’s such a fragmented system.

(CROSSTALK)

JEFFREY BROWN: What about, Avik Roy, the question of American individualism vs. communitarianism? We have had on this — our regular viewers know we have been highlighting, profiling a lot of individual cases of their experience of the new health care act.

And some people, I’m ready — I see I have to sacrifice so that others can get it. They — they’re willing to take that approach. Other people say, why should I pay more so that others can be covered?

AVIK ROY: Well, I think what this comes down to is the fact that, again, if somebody is born with Down syndrome — I think most Americans would say a child that is born with Down syndrome, let’s try to provide that child with adequate health care.

The question becomes when you create a system that disincentivizes people from being economically productive, that incentivizes people to drop out of the work force, that incentivizes them to rearrange their income to gain higher amounts of government benefits, that’s a system where the average taxpayer works hard and plays by the rules feels — feels like he’s not being treated fairly.

And then a large part of the problem, again, is the existing system of subsidy, which overwhelmingly benefits the elderly, who end up receiving a lot more in benefits than they put into the system in terms of payroll taxes and premiums.

So, the system in general is largely redistributed, but in the wrong direction and in an unfair direction. Unfortunately, again, the Affordable Care Act makes a lot of these problems worse. It takes the individual insurance market, where people shop for coverage on their own, which is already a disadvantaged market, where people pay higher prices net than other people do, and it makes that market more expensive.

And so, again, people who are healthy, who work out, who try to eat right, who stay healthy, but shop for coverage on their own, are now having to pay a lot more for coverage to subsidize other people. And, again, we may say that we want to subsidize other people to a degree, but we’re — we’re doing that on the backs of people who probably are not exactly the most advantaged people in the system today.

JEFFREY BROWN: All right, let me let Jacob Hacker respond to that.

JACOB HACKER: Well, I mean, I think that we should recognize there are a lot of cross-subsidies in the present system in redistribution.

In fact, because of the way the tax breaks for health insurance are structured, the current system is actually very favorable to people who have insurance and to higher-income people. So part of the goal of the Affordable Care Act was to make subsidies for health insurance, to make help for health insurance available to those with lower incomes.

And so if you look at the law, it’s actually very much supporting the idea that people should be in the work force and receiving their health benefits through their hard work. For example, it is trying to encourage employers to continue to provide health insurance, which I think over the long term, is going to be difficult to maintain.

But it’s certainly an approach that’s consistent with the work-oriented system we have today. And the only thing it’s really doing on the side of bringing up benefits is to really try to make sure that it fills those gaps that exist now between the Medicaid program for the very poor and those who have good health insurance through their employment, often people who have higher wages and who are receiving larger tax breaks.

One thing I would say — and I really think I need push back against a point that Avik made — is that there are some people who are losing out because they were low-risk people who had very inexpensive individual policies. But those policies were in no way guaranteed in the individual market. Insurers are changing their policies every year.

Moreover, they were advantaged in part because they were, in the years that they were healthy, able to get these low-cost policies. A system that’s going to make sure that people have coverage over their lifetimes and it’s going to make sure that those who are healthy are paying in, as well as those who are sick, is going to have to make sure that policies are available, are continuous, and sometimes that will be more costly.

But, for most people, we have seen the costs are going to be lower than they have — than the policies they had today, especially when you take into account the large subsidies that people are going to receive if they have lower incomes.

JEFFREY BROWN: All right, Avik Roy, you get a last word on that.

AVIK ROY: Yes.

So, this really comes down to the question of individual liberty vs. a central design of the insurance market. And I think what we have seen is that when you give people more control over their health dollars through health savings accounts, through choice of their own insurance plans, the costs are much lower and the quality of plans is much higher.

It’s when the government starts to determine what the plans must contain that you have problems with access to care. In Medicaid, it’s very for patients to getting access to physicians. The health outcomes are much worse than they are for people with private insurance. These are the problems — these are the concerns that Americans have.

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